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U.S. Tax Court

Easement clause failed to protect charity in perpetuity, so no charitable deduction

Easement clause failed to protect charity in perpetuity, so no charitable deduction

Carroll, (2016) 146 TC No. 13 The Tax Court has held that a clause in an easement, which provided for the amount the donee would receive if conditions caused an extinguishment of the perpetual conservation restriction, did not meet the requirements of a reg under the charitable deduction Code section that requires that a conservation […]

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Tax Court – No IRS abuse in rejecting offer-in-compromise where taxpayer had cash and receivables

Tax Court – No IRS abuse in rejecting offer-in-compromise where taxpayer had cash and receivables

Strong, TC Memo 2016-70 The Tax Court has upheld IRS’s rejection of a taxpayer’s offer-in-compromise (OIC) that was based on doubt as to collectibility. The Court rejected the taxpayer’s argument that IRS abused its discretion by considering his business receivables as business assets for purposes of the OIC.  Click here for the Opinion of the […]

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AOTC denied for year following the year in which tuition was prepaid

AOTC denied for year following the year in which tuition was prepaid

McCarville, TC Summary Opinion 2016-14 In a summary opinion, the Tax Court has held that a cash-basis, calendar-year taxpayer who prepaid college tuition expenses for a semester that began during the first three months of the following year could not claim the American Opportunity Tax Credit (AOTC) for the year in which the semester began. […]

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Tax Court – donee received only life insurance protection, so split dollar economic benefit regime applied

Tax Court – donee received only life insurance protection, so split dollar economic benefit regime applied

Estate of Morrissette, (2016) 146 TC No. 11 The Tax Court has examined the terms of a split dollar life insurance arrangement, determined that the party that received the funds to pay the premiums from the other party received no economic benefit other than current life insurance protection, and therefore ruled that the “economic benefit […]

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No Tax Court jurisdiction in worker classification case because there was no IRS audit

No Tax Court jurisdiction in worker classification case because there was no IRS audit

B G Painting, TC Memo 2016-62 The Tax Court has held that IRS’s determination that a taxpayer’s worker was its employee, in response to the employee’s request for that determination under IRS’s SS-8 program, did not meet the criteria necessary to provide the Tax Court with jurisdiction over the taxpayer’s petition to review IRS’s determination. […]

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Taxpayer must report share of partnership income even though he was unaware there was income

Taxpayer must report share of partnership income even though he was unaware there was income

Lamas-Richie, TC Memo 2016-63TC Memo 2016-63 The Tax Court has concluded that a gossip blogger was liable for tax on his distributive share of partnership income that was not actually distributed to him and of which he was not aware until IRS began examining his return for the year at issue. However, the Court declined […]

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Jet service activity wasn’t for profit, so taxpayer can’t claim losses in excess of income

Jet service activity wasn’t for profit, so taxpayer can’t claim losses in excess of income

Hoffmann, TC Memo 2016-69 The Tax Court has concluded that a taxpayer was not entitled to deduct losses from his jet service activity that exceeded the amount of income derived therefrom because the activity was not conducted with the intent of generating a profit. The Court found that, contrary to the taxpayer’s argument that he […]

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Tax Court – no clear link from financial problems to not paying tax, so penalties, liens, levies applied

Tax Court – no clear link from financial problems to not paying tax, so penalties, liens, levies applied

Nutrition Formulators Inc., TC Memo 2016-60 The Tax Court has held that an employer did not have reasonable cause that would excuse penalties for failure to deposit employment taxes, failure to pay employment taxes shown on its return and failure to timely file a return, and that IRS settlement officers acted properly in sustaining lien […]

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No relief for taxpayer who received IRS notice after deadline for protesting it

No relief for taxpayer who received IRS notice after deadline for protesting it

Atuke vs. Commissioner of Internal Revenue, Order of Dismissal for Lack of Jurisdiction, Tax Court Docket No. 31680-15SL (Apr. 15, 2016). In an unpublished order for dismissal, the Tax Court has held that it had no jurisdiction to hear a taxpayer’s appeal, brought after the 30-day deadline, of IRS’s determination following a collection due process […]

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Tax Court – Sale of scrap metal didn’t result in self-employment income

Tax Court – Sale of scrap metal didn’t result in self-employment income

Ryther, TC Memo 2016-56 The Tax Court has concluded that scrap metal abandoned by a steel-fabrication business and later sold by the owner of that bankrupt business didn’t generate self-employment income.  Click here for the Opinion of the Court. Background. A taxpayer’s self-employment income is subject to self-employment tax. (Code Sec. 1401(a), Code Sec. 1401(b)) Self-employment […]

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Seventh Circuit lambasts Tax Court on its hobby loss analysis in horse racing decision

Seventh Circuit lambasts Tax Court on its hobby loss analysis in horse racing decision

Roberts v. Comm., (CA 7, 4/10/2016) 117 AFTR 2d ¶ 2016-629 The Court of Appeals for the Seventh Circuit, reversing the Tax Court, has concluded that a taxpayer’s horse racing activities were entered into for profit. The Court characterized the Tax Court decision as untenable, in that it in effect concluded that a business’s start-up […]

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Surviving spouse can’t use deceased husband’s minimum tax credit from pre-marriage year

Surviving spouse can’t use deceased husband’s minimum tax credit from pre-marriage year

Vichich, (2016) 146 TC No. 12 The Tax Court has held that, where a man had an alternative minimum tax (AMT) as a result of exercising an incentive stock option (ISO) in a year before he got married, divorced, got married again, and then died before he could fully use the minimum tax credit (MTC) […]

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Tax Court -purported welfare benefit plans were nonqualified deferred compensation arrangements

Tax Court -purported welfare benefit plans were nonqualified deferred compensation arrangements

Machacek, Jr., TC Memo 2016-55 In consolidated cases, the Tax Court has concluded that purported welfare benefit plans in which the taxpayers’ companies participated were nonqualified deferred compensation arrangements, and the taxpayers had to include in their gross income any vested accrued benefits in the plan under Code Sec. 402(b)(4), because the plan failed to […]

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Tax Court Finds IRS May Plead Grounds Not In The Notice Of Deficiency

Tax Court Finds IRS May Plead Grounds Not In The Notice Of Deficiency

Ax, (2016) 146 TC No. 10 The Tax Court has allowed IRS to amend its answer in order to affirmatively allege facts in support of two new issues (i.e, the issues of economic substance and “ordinary and necessary”). It also said that its looking beyond the notice of deficiency in a deficiency case did not […]

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No innocent spouse relief for wife where husband not deceptive and wife didn’t ask questions

No innocent spouse relief for wife where husband not deceptive and wife didn’t ask questions

Arobo, TC Memo 2016-66 The Tax Court has held that where a couple filed jointly, the husband had always been the primary financial provider, and their lifestyle hadn’t changed from earlier years when the couple reported significant business income on their returns, the wife did not qualify for innocent spouse relief with respect to their […]

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Tax Court – Deed of easement didn’t meet written acknowledgment rules, so no charitable deduction

Tax Court – Deed of easement didn’t meet written acknowledgment rules, so no charitable deduction

French, TC Memo 2016-53 The Tax Court has held that a deed of easement didn’t meet the charitable deduction contemporary written acknowledgement requirements of Code Sec. 170(f)(8)(B) and therefore the taxpayer didn’t qualify for a charitable deduction.  Click here for the Opinion of the Court. Background. Code Sec. 170(f)(8)(A) provides that no deduction is allowed […]

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Tax Court – payments that taxpayer made under court’s pretrial order were deductible alimony

Tax Court – payments that taxpayer made under court’s pretrial order were deductible alimony

Anderson, TC Memo 2016-47 The Tax Court has concluded that payments by one spouse to another were deductible alimony where the payment were made under an Alabama circuit court’s pretrial order and would have ended upon the death of either spouse under Alabama law.  Click here for the Opinion of the Court. Background. Generally, property settlements […]

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Tax Court – IRA owner’s guarantee of loan to IRA-owned corporation resulted in deemed distribution

Tax Court – IRA owner’s guarantee of loan to IRA-owned corporation resulted in deemed distribution

Thiessen, (2016) 146 TC No. 7 The Tax Court has held that a taxpayer’s personal guarantees of loans made to a corporation that he formed and that was owned by his individual retirement account (IRA) were prohibited under Code Sec. 4975 and resulted in a deemed distribution of all of the IRA assets. It also […]

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Tax Court – assets decedent transferred to limited partnership were subject to estate tax

Tax Court – assets decedent transferred to limited partnership were subject to estate tax

Estate of Sarah D. Holliday, TC Memo 2016-51 The Tax Court has held that the value of investment assets that a decedent transferred to a limited partnership had to be included in the value of her estate under Code Sec. 2036(a). The Court determined that the decedent didn’t have a legitimate and significant nontax reason […]

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Tax Court – No theft loss or bad debt deduction for taxpayer’s seemingly bad investment

Tax Court – No theft loss or bad debt deduction for taxpayer’s seemingly bad investment

Riley, TC Memo 2016-46 The Tax Court has held that a taxpayer’s investments in and loans to a rather questionable business venture of an acquaintance did not qualify for a theft loss deduction because she didn’t prove that her acquaintance made false representations. The taxpayer also did not qualify for a bad debt deduction because […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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